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Peloton 'is in transition,' Goldman's Sheridan says after meeting with CEO

·Anchor, Editor-at-Large
·2 min read

Peloton's road to a turnaround will be long and winding.

"The company is in transition," Goldman Sachs Managing Director Eric Sheridan told Yahoo Finance Live at the Goldman Sachs Communacopia + Technology Conference on Tuesday. Sheridan met with new CEO Barry McCarthy at the conference. "Now Barry is starting to put his imprint on the organization."

On Tuesday, after the close of trading, Peloton said Co-Founder John Foley is stepping away from the company he founded.

The embattled founder will leave the company's board of directors. The decision comes months after Peloton hired McCarthy, a former Spotify exec, as CEO.

"The company has accepted the resignations of John Foley as Executive Chair and Hisao Kushi as Chief Legal Officer, effective September 12, 2022 and October 3, 2022, respectively," a press release stated.

Kushi, also a co-founder, will be replaced by Tammy Albarrán, who most recently served as Uber's chief deputy general counsel and deputy corporate secretary.

A source told Yahoo Finance that Foley — who along with his wife and other insiders controls close to 60% of Peloton's voting shares — may sell his stake in the company after a cooling-off period.

Peloton stock fell around 10% in Wednesday's session amid a broad market rout.

McCarthy has his work cut out for him in turning around the company.

The company's quarterly revenue in its fiscal fourth quarter tanked 28% as members rolled off the workout platform. Peloton’s quarterly loss — which included $415 million in restructuring charges — totaled $3.68 per share. The company's adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization] came in at a $288.7 million loss in the quarter.

Peloton has now lost about $1.5 billion total in its last two fiscal years.

A person walks past a Peloton store in the Manhattan borough of New York City, U.S., January 25, 2022.  REUTERS/Carlo Allegri
A person walks past a Peloton store in the Manhattan borough of New York City, U.S., January 25, 2022. REUTERS/Carlo Allegri

Goldman's Sheridan said it may take time for the stock to recover as investors wait out signs of improving margins and cash flow.

"I have noticed a will by investors coming to me wanting to focus more on Peloton's stock as people are looking for those turnaround stories in 2023," Sheridan added. "We are still Neutral rated on the stock. But it was a fascinating discussion [with Barry] about how you are trying to turn a pandemic winner and executive against a turnaround strategy into next year."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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